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TMI Blog2019 (7) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... tion participation fees will be paid by the exhibitors to the applicant. The participation fee for exhibition is charged from the exhibitors against the service of organizing trade show. Hence such service shall be classifiable under HSN 998596 (i.e. events, exhibitions, conventions and trade shows organisation and assistance services) and applicant is liable to pay tax at the rate of GST (SGST 9%+ CGST 9%). Brand promotion packages - nature of service and classification - N/N. 11/2017-CT(R) dated 28.06.17 - Whether the applicant is liable to pay tax on services provided to the brand promoters or the liability to pay tax on such services falls on recipient under reverse charge according to Notification No. 13/2017 - Central Tax (Rate)? - HELD THAT:- The brand promotion packages offered by the applicant should be classifiable under HSN 998397 having description Sponsorship services and brand promotion services taxable at the rate of GST (SGST 9%+ CGST 9%). The sponsorship service is specifically covered under services liable to tax on reverse charge basis under Section 9(3) of CGST Act, 2017 vide Notification No. 13/2017 - Central Tax (Rate) dated 28.06.2017 - the brand prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of CGST/RGST Act, 2017, within a period of 30 days from the date of service of this order. At the outset, we would like to make it clear that the provisions of both the CGST Act and the RGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the RGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / RGST Act would be mentioned as being under the GST Act . The issue raised by M/s. All Rajasthan Corrugated Board and Box Manufacturers Association, C-49, Industrial Estate, Baais Godown, Jaipur, Rajasthan 302006 (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97 (2) (a)(b)(d) given as under : a. Classification of any goods or services or both; b. Applicability of a notification issued under the provisions of the act; d. Admissibility of input tax credit of tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; h. That all the above supplies provided together to the delegates are taxable supplies. To determine natural bundling, Education Guide issued by CBEC in the year 2012 is referred which provided that whether services are bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the area of business to which sendees relate. Such normal and frequent practices adopted in a business can be ascertained from several indicators some of which are listed below - The perception of the consumer or the service receiver. Majority of service providers in a particular area of business provide similar bundle of services. For example, bundle of catering on board and transport by air is a bundle offered by a majority of airlines. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. Other illustrative indicators, not determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No. 11/2017 - Central Tax (Rate) 23 Heading 9985 (Support services) Support services other than (i) and (ii) above. 9 - The applicant understands that services by the applicant to the delegates shall be classified under HSN 998596 taxable at the rate of 18%. 1. As explained in the facts of the case, the applicant will organize in the course of event, a trade fair also. The exhibitors will be allowed to display their products at a specified location in the trade fair venue, advertise their brand and products, distribute pamphlets or brochures etc. The consideration, i.e., exhibition participation fees will be paid by the exhibitors to the applicant. The applicant understands that the participation fee for exhibition is charged from the exhibitors against the service of organizing trade show. Hence such service shall be classified under HSN 998596 i.e., Events, exhibitions, conventions and trade shows organisation and assistance services and the applicant shall be liable to pay tax at the rate of 18%. m. Those categories of brand promotion packages will be o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce venue and food beverages II. Supply of food beverages by outside caterers. III. Services provided by event manager like pickup drop, exhibition stall setup, tenting, etc. The hotel will be providing a bouquet of Services to the querist like accommodation for the delegates, availability of conference hall and Food beverages. The above bundle of services shall qualify as a composite supply by the hotel where accommodation service shall be the principal supply. Input Tax Credit of CGST and SGST charged by the hotel on the composite supply of accommodation service shall be available to the applicant since such supply will be used in course of business and it is an eligible credit in terms of Section 16 of CGST Act, 2017. o. In relation to input tax credit on food and beverages supplied by outside caterers, Section 17 (5) provides that ITC of tax paid on food and beverages shall be available to the applicant because the applicant will use such inward supply as an element of an outward supply of event organization which is a taxable composite supply. p. In relation to rent-a-cab service, the provisions mentioned in Section 17(5) provides for eligibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mixed Supply b. Service to the Executers Mixed Supply 2 2 Brand Promotion Package Service. Mixed Supply a. Nature of Service Mixed Supply b. Reverse Charge Mechanism Refer to Section 9(4) of CGST Act, 2017. 3 3 Input Tax Credit Admissible a. Nature of Service ITC Allowed b. Reverse Charge Mechanism ITC Allowed c. Nature of Service ITC Allowed d. Reverse Charge Mechanism ITC Allowed VII. FINDINGS. ANALYSIS CONCLUSION: a. We find that the applicant is an association having its office in Jaipur (Rajasthan) and is engaged for the upliftment and technological advancement of Corrugation Industry and for the purpose of upliftment and advancement of Corrugation Industry, Federation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emoved, the nature of the supply would be affected. We find that the above conditions and indicators resulting from concept of composite supply, it evidently appears that the supply made by the applicant to the delegates is a composite supply. e. Further, principal supply which is a substantial component under definition of composite supply is defined under GST Act, 2017 as under: principal supply means the supply of goods or service which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary; The primary factor to determine the principal supply is the essential nature of the composite supply and element of that supply which imparts essential nature to the composite supply. f. While going through the facts, we find that the basic intention of the delegates is to attend the conference and all the other services provided are facilities made available to them for an overall good experience of the conference only. g. Therefore, the principal supply in our view is organization of conference. Section 8 of GST Act, 2017 provides as under: 8. The tax liability on a composit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Supply of tour operators services.- Explanation tour operator means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged m the business of operating tours. 2.5 1. Provided that credit of input tax charged on goods and services used in supplying the service [, other than the input tax credit of input service in the same line of business (i.e. tour operator service procured from another tour operator)] 48 has not been taken. (H) Services by way of house-keeping, such as plumbing, carpentering, etc where the person supplying such service through electronic commerce operator is not liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017. 2.5 Provided that credit of input tax charged on goods and services has not been taken. Support services other than (i) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich indicate connection with the said goods, service, event or business entity. m. In view of above, brand promotion packages offered by the applicant should be classifiable under HSN 998397 having description Sponsorship services and brand promotion services taxable at the rate of GST (SGST 90/0+ CGST 9%). Annexure 356 Group 99839 Other professional, technical and business services 357 998391 Specialty design services including ulterior design, fashion design, industrial design and other specialty design services 358 998392 Design originals 359 998393 Scientific and technical consulting services 360 998394 Original compilations of facts or information 361 998395 Translation and interpretation services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l charge only (not under reverse charge basis). The service of brand promotion is classifiable under the combined entry HSN 998397 having description Sponsorship services and brand promotion services taxable at the rate of 18% GST (SGST 9%+ CGST 9%). and the applicant shall be liable to pay tax on such services under normal charge only. n. The applicant will procure various supplies during the course of event including the following: I. Services by hotel including accommodation, conference venue and food beverages II. Supply of food beverages by outside caterers. III. Services provided by event manager like pickup drop, exhibition stall setup, tenting, etc. Further, the hotel will be providing a bouquet of Services to the applicant in the instant case which are as under: Accommodation for the delegates Availability of conference hall Food beverages The above bundle of services shall qualify as a composite supply by the hotel where accommodation service shall be the principal supply since it is the predominant element of supply made by the hotel. According to Section 8 of GST Act, 2017 such composite hotel shall be treated as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause(a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance: Provided that the input tax credit in respect of such goods and services or both shall be available where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; Since the applicant will use such inward supply of rent-a-cab service as an element of outward supplies of event organization and brand promotion which are taxable composite supplies, therefore ITC of tax paid on rent-a-cab service shall be available to the applicant. 6. In view of the foregoing, we rule as follows:- RULING I. The Service provided by the applicant to the delegates and exhibitors is a composite supply and classifiable under Service Code 998596 having Service description Events, exhibitions, conventions and trade shows organizations and assistance services as per Annexure: Scheme of Classification of Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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